The Bank’s quarterly inflation report also suggested two more rate hikes are likely over the next three years to return inflation back to its 2% target, which could see rates hit 1% by the end of 2020.

The milestone rate hike comes as the Bank cut its forecast for growth to 1.6% for 2017 from the 1.7% previously predicted, but held forecasts at 1.6% for 2018 and 1.7% for 2019.

Millions of borrowers on variable rate deals will be impacted by the rates decision, which will add around £15 a month to the cost of the average mortgage, while it will offer some relief to savers hit by surging inflation and negligible returns.

But a quarter point rise will only reverse the emergency cut seen in the aftermath of the Brexit vote shock in 2016 as the Bank sought to head off turmoil in the economy.

And the Bank said the impact on mortgage borrowers would be modest and gradual, with around 60% on fixed rate deals.